Commentary and analysis on American politics, culture, and national identity, U.S. foreign policy and international relations, and the state of education
- from a neoconservative perspective! - Keeping an eye on the communist-left so you don't have to!

The U.S. is rolling into the new year with impressive strength as plunging oil prices have ignited consumer spending and helped fuel the best stretch of growth in more than a decade — even as economies around the world are struggling.

A basketful of mostly upbeat economic data Tuesday pushed financial markets to record highs, with the Dow Jones industrial average breaking through the 18,000-point barrier for the first time.

Investors were spurred by a Commerce Department report that the U.S. economy expanded at a remarkable 5% annual rate in the third quarter, the fastest pace since 2003 and a far cry from the tepid growth that has plagued most of the recovery from the Great Recession.

"This is literally shoot-the-lights-out sort of stuff," said Chris Rupkey, chief financial economist at Union Bank in New York. "This economy is pretty much roaring."

And the third quarter wasn't a fluke.

Total economic output, also known as gross domestic product, expanded at a 4.6% annual rate in the second quarter. It marks the first time the economy posted back-to-back quarters of more than 4.5% growth since 2003.

Economists don't expect the torrid pace to continue. The fourth quarter will probably keep the positive momentum, but at a more modest 2.5% to 3%.

With gasoline prices plummeting, Americans are feeling the difference in their bank accounts. Consumer spending jumped in November as incomes continued to rise.

And with a leading measure of consumer confidence on Tuesday hitting its highest level since 2007, signs point to strong spending carrying into next year, economists said.

"The U.S. economy prior to the oil price decline was doing reasonably well. It was chugging along," said Brian Bethune, chief economist at Alpha Economic Foresights.

"Then we get an accelerator, which is the drop in oil prices," he said. "It's equivalent to a big tax cut — and the tax cut is getting larger."

Although oil prices rose Tuesday — partly because strong U.S. growth signaled increased demand — they have fallen nearly 50% over the last six months.

That's caused the average price for a gallon of regular to drop to $2.38 a gallon, according to AAA. That's down 15 cents in just a week and 87 cents from a year ago.

The savings at the gas pump have boosted consumer spending, which rose 3.2% in the third quarter. Those figures beat an earlier estimate, and rose from 2.5% in the previous quarter. A big factor was an increase in spending on healthcare.

Heh. I just love it when the economy defies the leftist program of economic stagnation.